White House directs DOL to examine fiduciary rule

Part of Invesco’s Legislative Insights series

White House directs DOL to examine fiduciary rule

Jon VoglerOn Feb. 3, 2017, President Trump issued a memorandum directing the Labor Secretary to undertake an updated “economic and legal analysis” of the likely impact of the Department of Labor (DOL) fiduciary rule with several key considerations in mind:

  • Whether the April 10, 2017, applicability date of the fiduciary rule has harmed (or is likely to harm) investors through a reduction of Americans’ access to certain retirement savings offerings, retirement product structures, retirement savings information or related financial advice.
  • Whether it has resulted in dislocations or disruptions within the retirement services industry that may adversely affect investors or retirees.
  • Whether it is likely to cause an increase in litigation and an increase in the prices that investors and retirees must pay to gain access to retirement services.

To the extent that the new DOL analysis reveals any of these problems, or if the DOL concludes that the rule is inconsistent with the administration’s priorities, the Labor Secretary is directed to “publish for notice and comment a [new] proposed rule rescinding or revising the fiduciary rule.”

The administration’s stated priority in this area (as identified earlier in the memo) “is to empower Americans to make their own financial decisions, to facilitate their ability to save for retirement and build the individual wealth necessary to afford typical lifetime expenses, such as buying a home and paying for college, and to withstand unexpected financial emergencies.”

Interestingly, the final version of the memo did not include a directive that the DOL delay the rule for 180 days, which had been a feature of the draft provided by White House Counsel to the press earlier in the day. The final version also did not include the draft version’s directive to the DOL to consult with the Department of Justice to seek a stay of the litigation surrounding the rule.

The differences in the memos seem to reflect a last-minute White House determination that instituting a delay in the rule’s implementation date or consulting the Department of Justice to seek a stay of the litigation must be initiated by the DOL.

Just hours after President Trump signed the official document, acting Secretary of Labor Ed Hugler issued a brief statement declaring that the DOL “will now consider its legal options to delay the applicability date as we comply with the President’s memorandum.”

On Feb. 9, the DOL evidently sent a proposal to the Office of Management and Budget (OMB) to delay the fiduciary rule’s implementation date by 180 days, with a 15-day comment period. It has also been reported that the DOL may send a separate document to OMB, which would solicit comments on the fiduciary rule in order for the DOL to perform the review directed by the President, with a possible 30-day comment period. As of this writing, the final content of these messages has not been confirmed.

We’ll keep you posted.

Important information

Blog header image: Mike Flippo/Shutterstock.com

Jon Vogler
Senior Analyst
Retirement Research, Invesco Consulting

Senior Analyst Jon Vogler draws on extensive pension expertise to offer retirement thought leadership for Invesco. In addition to writing Invesco’s Retirement blog, he tracks legislative and regulatory developments and contributes as a writer and editor to a variety of retirement-related Invesco communications.

Prior to joining Invesco in 2008, Jon spent more than 25 years in the research, writing, compliance and underwriting areas of the retirement services industry, including roles as a senior consultant at Mutual Benefit Life’s pension consulting firm and as a compliance manager in the Automatic Data Processing retirement services division.

Jon earned the Fellow, Life Management Institute (FLMI) and Competent Toastmaster (CTM) designations. He has a B.A. in History from Rutgers, The State University of New Jersey.

More in Retirement
Test your CIT knowledge

I regularly talk with retirement plan sponsors who are considering collective investment trusts (CITs), along with mutual funds and other investment vehicles, as part of...